I bought ANZ for maybe $26 in early 2008. I can't remember now -- it was a long time ago. I also over-invested (gambled) in what should have been a very safe, conservative Australian supermarket REIT which lost about 90% in twelve months in 2008/9. It went from $2.00 to around 20c. I guess current SCG or SYD shareholders could relate. I bought more in early 2009 for perhaps 40c while the market was crashing, then didn't look at the market again for a very, very long time. I wasn't working at the time and had no money to invest while sitting on a big paper loss. Not that I would have bought more, even if I'd had the funds. I was kind of in shock and disbelief. Meanwhile, I kept receiving dividend cheques for both stocks. It was not a pleasant experience. I thought I was Warren Buffet back in 2007, but in hindsight I wasn't investing, I was being foolish.
I went abroad to work for three years, came back to Australia, and at some point I logged back in to Commsec to find -- to my great surprise -- the ANZ shares were about 20% up and the REIT (where most of the money was) was only 10% down from what I'd paid in 2007. I really wanted to get out and never, ever look at stocks ever again. Term deposits all the way for me going forward. Another stupid decision! Term deposits get you nowhere; especially in 2020.
A couple of years later, ANZ dipped from about $32 to $27 and I overcame my misgivings to buy a small parcel. I enjoyed the dividends every six months, but the share price went nowhere. Here we are in 2020, and I'm in the same position again with ANZ! However It's not a large holding for me overall, ANZ is not going broke, the dividend yield is 5%, and I will average down with dividends and contributions as the share price rises to meet my average purchase price. I have already bought a few more.
The first thing I did in March, when the market crashed, was to login to the registry and set up participation to the re-investment scheme. It did nothing at the time (ANZ had already deferred its dividend) but gave me a psychological sense of control; a feeling I had taken steps to improve my situation. I am mindful not to over-commit with averaging down -- not out of fear of losing more money, but because there is often better value elsewhere and better places to deploy available funds. I have much more confidence in WPL, for example.
I guess this is why I've been looking at the energy and REIT sectors so carefully since March as I've aways wondered "what if...". What If I'd bought heavily in early 2009 instead of early 2008 and held. I would have made a fortune. When the market crashed in March I had a reasonable amount of savings available as the market was crashing, and with that money, I purchased......nothing. I couldn't bring myself to buy The lessons I learnt from 2008/9 were: 1. Don't over-commit; 2. Blue chip market leaders in beaten-up sectors will have their day again whether tomorrow or in five years' time; 3. Re-invest dividends and average down to lower my entry price as the price rises; 4. Don't take much notice of the alarmist financial media; 5. People have short memories. Sectors can go from being dogs to over-achievers in two or three years with 50-100% price gains.
I hope this helps.
WPL Price at posting:
$17.55 Sentiment: Buy Disclosure: Held
The lessons I learnt from 2008/9 were: 1. Don't over-commit; 2. Blue chip market leaders in beaten-up sectors will have their day again whether tomorrow or in five years' time; 3. Re-invest dividends and average down to lower my entry price as the price rises; 4. Don't take much notice of the alarmist financial media; 5. People have short memories. Sectors can go from being dogs to over-achievers in two or three years with 50-100% price gains.
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